THE VALUE OF GOLD

The recent falls in precious metals, particularly gold, is not due to the 'end of the commodities boom' as so many financial pundits on television have been advocating (I wonder what planet these people live on), but mainly due to covering margins on the large losses institutions have found themselves with, and as a consequence they are selling anything that has been profitable to meet those calls, hence the downward trend in Gold. This is a short term knock back that will correct itself, but it has given us an opportunity to benefit from this metals ultimate rise.

Gold is a commodity with intrinsic worth. It is rare and valuable. It's a great place to store value in turbulent times. However, most if not all of us hold our money in 'fiat' currency - that is, worthless paper or digits on a computer.

When I say 'worthless' I mean it's worth whatever those in power decide it will be worth. We are currently slap-bang in the middle of a serious banking crisis, which is being frantically papered over faster than the eye can see. If we are very, very lucky, we the tax payer will believe the soothing words, the injections of cash (that's OUR cash, by the way) and all the smoke and mirrors.

If we are unlucky, the excesses of greed and carelessness displayed by our 'sober' financial institutions will be worse than we feared. We will see more collapses of household named financial institutions and possibly financial meltdown. If anything like that happens, your 'money' will not be worth much.

The problem is the big institutions do not want the rest of us getting wind of this fact. Imagine if too many of us run for the safety of gold (taking our cash out of banks, building societies, ISAs and so on) - the system is shaky at best and this could precipitate the total collapse of the system.

If 'they' can make gold seem erratic, fickle and prone to sharp drops in price, it makes it far less tempting as a safe haven. But can 'they' keep the price of gold low? It takes a serious amount of cash to achieve this in the face of such financial uncertainty.

I'm a firm believer that they will not be able to hold the price down indefinitely. I expect another break through the $1,000 line very soon and this time, I expect it to continue to rise.

There are many reasons to trade, invest and hold Gold and if you would like to know more about how you can profit from Gold's inevitable rise, and other such related matters, why not contact Graydon & Associates